(solution) Management Accounting Online Test Duration: 1 Hour Theory

(solution) Management Accounting Online Test Duration: 1 Hour Theory

Management Accounting Online Test

Duration: 1 Hour

Theory Questions, and Calculation Questions 

Management Accounting
&
Business
ACCT 1060
ACCT 1063
ACCT2244
Lecture 1:
Introduction to Management Accounting MAB Overview
Welcome to MAB
What we do?.
? 2 hr Weekly Lecture: slides with content; lecture illustration; group activity
? 1 hr Weekly Tutorial: review of group activity; textbook material How we assess ?.
? Group Assessment = 20%
? 10% Lecture Activity (Kilgors-part 2, week 10)
? 10% Lecture Activity (best 3 out of approx. 8 over the entire semester)
? Individual Assessment = 30%
? MST (around Week 7): including Kilgors part 1(10%)
? Online (practical and theory)
? Final Exam = 50% Management Accounting and Business 2 Objectives
This topic introduces the concept of ?Management Accounting?
1. Students should be able to understand the role of management accounting
2. Students should be able to differentiate between management accounting
information for internal decision making and financial accounting information
for external reporting.
3. Students should be able to recognise the dual purpose of cost accounting
techniques
4. Students should be able to explain how organisational vision and strategies
link to actual operations
5. Students should be able to explain the role of information and decisions
confronting managers Management Accounting and Business 3 Management Accounting Management accounting is the process of
identifying, collecting and analysing accounting
data for the management team to make decisions
and to assess organisational efficiencies and
effectiveness. The value chain specifies the domain for management
accounting processes Management Accounting and Business 4 Management decision making
Financial accounting
prepares reports most
frequently used by
decision makers external
to the organisation Management accounting
prepares reports most
frequently used by
decision makers internal
to the organisation Cost accounting is a ?method for measuring
the cost of a project, process, or thing?
It includes both financial and nonfinancial
information and is used for both financial
and management accounting
Management Accounting and 5 Management decision making
External reporting Internal reporting Shareholder reports
? Financial statements
? Special purpose
reports
? News releases
Other stakeholder
reports
? Credit reports
? Inventory reports for
suppliers
Government reports
? Regulatory
compliance
? Tax returns
Management Accounting
and
? Cost
reports Support organisational
strategies
? Capital budgets
? Product development
? Analysis of potential
acquisitions
Support operating
plans
? Operating budgets
? Analysis of product
mix
? Cash flow plan
Monitor and motivate
? Actual vs planned
performance 6 Taxonomy of accounting Source: Strategic Finance: Coskins (2013: 13) Management Accounting and Business 7 Management decision making: strategy Organisat
ional
vision Core
competen
cies Organisat
ional
strategies Operating
plans Actual
operation
s Overview of management decision making Management Accounting and 8 Organisational vision and mission
? Organisational vision is the core purpose and
ideology which guides an entity?s
?overall direction
?approach to its stakeholders ? Organisation core competencies are the entity?s
strengths relative to competitors Organisat
ional
vision
Management Accounting and Vision helps locates
strengths
Strengths help
shape vision
9 Core
competen
cies Organisational strategies
? Future Focused (high value add)
?Tactics that managers use to work toward the
organisational vision while taking advantage of the
core competencies
?Long term in nature (> 12 months; usually 3-5 yrs or
more depending on organisation)
?Include organisation structure, financial structure, and
long-term resource allocation strategies
? Management accounting practices include techniques
to help with investment appraisal (capital budgeting,
acquisitions and new product development)
Management Accounting and 10 Organisational strategies: Specific approaches
? Low-cost strategy
Economies of scale in production
?Experience curve effects
?Tight cost control
?Cost minimisation in R&D, service, sales force,
advertising ? A differentiation strategy
?Creating something customers perceive as being unique
?Brand loyalty, superior customer service, dealer
network, product design and product features,
technology
Management Accounting and Business 11 Management Decisions: Operating Plans
? Short-term focused (modest value-add)
? Operating plans (budgets)
? Generally involves planning for a short-term time
frame (generally up to 12 months)
? Include specific performance objectives such as
budgeted revenues and costs ? Actual operations
? Measures actions taken and the results achieved over a
period of time
? Compares actuals with proposed plans (budgets)
? Feedback, corrective actions and learning
Management Accounting and 12 Decisions confronting managers
? Measuring, monitoring and motivating performance
?Managers use results of operations to monitor
performance and ensure it is in line with organisational
vision
?Results of operations make managers re-think
organisational vision or their view of the organisation?s
core competencies ? Role of financial and non-financial information
?Management accounting is not just providing financial
information for decisions but also relies on nonfinancial and qualitative data to inform decisions
Management Accounting and 13 Relevant information for decision making
? Relevant information
?Helps decision maker to evaluate and choose among
alternative courses of action
?Concerns the future
?Varies with the action taken
?rent out space versus use in business ? Relevance of information depends on type of
decision and other factors
? Irrelevant information does not vary with the action
taken and therefore is not useful for decision making
Management Accounting and 14 Decision-useful information
Decision-useful information
?. needs to be considered in light of:
1. Opportunity costs are the benefits foregone when
we choose one alternative over the next best
alternative
2. Cost-benefit analysis is an evaluation of the
benefits derived from the information and the
costs of collecting it Management Accounting and 15 Decisions confronting managers
? Goal Kicking versus Goal Keeping
? The role of the Chief Financial Officer (CFO) is to
manage both ?goal keeping? and ?goal kicking? roles
? Strategic management accounting tends to be ?goal
kicking? focused
? Cost accounting contributes to the ?goal keeping? role
? At times, these two roles can conflict ? Proactive or Reactive
?Should management be conservative or take risks?
?Should they be strategic or react when uncertainty
exists?
Management Accounting and Business 16 Value Chain Analysis
Review Chalice Case ? 1st part Organisati
onal
vision
Organisati
onal
strategies
Core
competen
cies Operatin
g
plans Management Accounting and Business Actual
operatio
ns 17 Lecture Illustration
? Refer to Chalice Wine Case
Discuss the following:
1. Describe Chalice?s vision, mission and strategies
? Do you think they are cost leaders or differentiators?
2. What external influences would impact Chalice Wines?
3. What financial information would be useful for Chalice
Wines management?
4. What non-financial information would be useful for Chalice
Wines management?
5. Describe the management accounting role at Chalice
Wines. What would it entail? Management Accounting and Business 18